During initial interviews with clients, one of the most common questions I get asked is: “why do I need a separation agreement?”. For many clients, the rationale goes something like this: “My spouse and I are able to communicate despite wanting to separate. We agree to everything between us. We don’t need lawyers telling us what to do and charging us money for it.”
Related to these statements is the inaccurate belief that lawyers are only needed if things “go wrong”. The idea of the courtroom lawyer continues to permeate our psyche about what lawyers do. The reality, however, is that hiring a lawyer when things have not descended into conflict is a good idea, and in the long run, a good use of money. In fact, my experience has been that clients invariably end up spending many times more on legal fees when conflict arises as a result of not having a valid separation agreement.
Here are a few reasons why having a valid separation agreement (which includes independent legal advice from a lawyer) is a good idea:
- Independent Legal Advice. Clients often underestimate the importance of legal advice. I have had many clients come to see me with one view as to what should be included in the agreement. In most cases, these clients will ask to modify the agreement after receiving legal advice. The reason for this is that legal advice often clarifies misunderstandings and also identifies areas the client did not turn his or her mind to. Even those clients who do not modify their agreement have a better understanding of what they are signing, and understand where the agreement stands in relation to legal principles.
- Financial disclosure. Part and parcel of receiving legal advice is to obtain and provide financial disclosure. In addition to the fact that financial disclosure is a requirement under our legislation, it also gives you reassurance that you have a complete view of the family’s finances.
- Enforceability. It’s great to have an informal agreement about child support, spousal support and property with your spouse – when things are going well. However, if things go wrong and a party runs to court, those terms will not be enforceable. You need a valid separation agreement to have a chance to enforce those terms in court.
- Conflict resolution. Lawyers will also typically work with clients to think about options to resolving conflict in the future. This goes a long way towards preventing conflict in the future and, where conflict is inevitable, providing a framework under which clients can resolve their disagreement without proceeding directly to court.
- Obtaining Financing. After separation, you may need to obtain financing from the bank to purchase property or simply to establish a line of credit. Many banks will require a valid separation agreement in order to approve any loans made to you as they will need to know the amount of support you are required to pay or will receive. I have had clients come to see me in a “panic” because they made an offer on a home and were unable to secure a mortgage without an agreement. You don’t want to be in this situation.
- Obtaining Releases from Pensions. Certain pensions, such as federal pensions, require parties to file a valid separation agreement in order to fully release a spouse’s interests in the pension. Given the potential value of pensions, this is an important consideration in determining whether or not to proceed with a valid separation agreement.
If you have any questions about whether you should be negotiating a separation agreement with your spouse, please feel free to call us.